Payne was born in Hamilton, New York, on June 26, 1843. He attended the Auburn Academy in Auburn, New York, and then graduated from the University of Rochester in 1864. A lawyer, he was admitted to the bar in 1866 and practiced in Auburn, rising to become the Cayuga Countydistrict attorney from 1873 to 1879. Payne served in a number of administrative roles for the city of Auburn, as city clerk in 1867–8, supervisor in 1871–2, and president of the board of education from 1879 to 1882. He was appointed a member of the American-British Joint High Commission in January 1899.